, Volume 24, Issue 3, pp 282-290
Date: 24 Aug 2011

Cost Versus Enrollment Bubbles

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Introduction

Bubbles are a rare but increasingly frequent phenomenon. In their book Manias, Panics, and Crashes, Charles P. Kindleberger and Robert Aliber document the most famous financial bubbles, including

  • the Dutch Tulip bubble in the 1630s

  • the South Sea Company bubble in 1720

  • Japanese and Nordic real estate and assets in the 1980s

  • the Dotcom bubble in the 1990s

    Charles P. Kindleberger and Robert Aliber, Manias, Panics, and Crashes: A History of Financial Crises, Wiley Investment Classics, 5th ed. (Hoboken, NJ: John Wiley & Sons, 2005).

Recent events will undoubtedly add the recent housing bubble in the U.S. to the list. We argue that higher education in the United States is experiencing a bubble as well.

The Case for the Existence of a Bubble in Higher Education

The defining characteristic of a bubble is unsustainable growth that eventually reverses. Bubbles typically arise when uncertainty leads to unsustainable trends,

See Andrew Gillen, A Tuition Bubble? Lessons from the Housing Bubble,